Neural tube development requires the coordination of a complex series of morphological events, and neural tube defects are among the most common human birth defects. Signaling via the Sonic Hedgehog (Shh) pathway regulates dorso-ventral patterning of the developing forebrain and neural tube. Mutations in the human SHH gene cause holoprosencephaly (HPE), a devastating genetic defect of forebrain development that affects 1 in 250 conceptions and 1.3 per 10,000 live births. Mutations at multiple loci can cause HPE, and a wide spectrum of HPE phenotypes is observed, suggesting a complex molecular basis for this disorder. Tgif1 and Tgif2 are transcriptional corepressors that limit Transforming Growth Factor (TGF) signaling via the Smad transcription factors. Mutations in the human TGIF1 gene are found in HPE patients, but the mechanisms by which TGIF1 mutations cause HPE, and by which Tgifs and TGF signaling control forebrain and neural tube development are not known. We created a mouse model for complete loss of Tgif function by conditionally deleting Tgif1 in the context of null mutation in the related Tgif2. Our data suggest a model in which loss of Tgif function disrupts Shh signaling to cause HPE. In the absence of Tgifs, excess signaling via the TGF pathway prevents the neuroepithelium from responding to the Shh morphogen, and increases expression of Gli3, which further inhibits Shh signaling. We propose to test the model that TGF signaling must be tightly controlled during neural development by transcriptional corepressors, such as Tgif1 and Tgif2. When these controls are defective, excess TGF signaling activates Gli3 expression throughout the neural tube, and disrupts cell polarity in the neuroepithelium resulting in an inability to respond to Shh To test this model, we will: 1) Test the hypothesis that Tgifs maintain dorso-ventral neural tube patterning by regulating the Shh pathway. 2) Test the hypothesis that Smads directly activate Gli3 gene expression to control neural tube development. 3) Test the hypothesis that by regulating cell polarity Tgifs maintain neuroepithelial competence to respond to Shh. This work will determine whether loss of Tgif function causes HPE by disrupting the Shh pathway, and determine the importance of limiting TGF family signaling during neural tube development. Additionally this work will determine how the TGF and Shh signaling pathways interact, and test the model that TGF signaling determines the competence of the neuroepithelium to respond to Shh by controlling cell morphology.